India-UK pacts will deepen comprehensive strategic ties, says PM Modi

". These landmark agreements will further deepen our Comprehensive Strategic Partnership, and catalyse trade, investment, growth..." PM Modi said

Prime Minister Narendra Modi on Tuesday called the Free Trade Agreement (FTA) between India and the United Kingdom a “landmark” deal that will boost trade, investment, innovation, and job creation in both economies, while opening new business opportunities, strengthening economic ties, and deepening people-to-people connections.

 

"Delighted to speak with my friend PM Keir Starmer. In a historic milestone, India and the UK have successfully concluded an ambitious and mutually beneficial Free Trade Agreement, along with a Double Contribution Convention. These landmark agreements will further deepen our Comprehensive Strategic Partnership, and catalyse trade, investment, growth, job creation, and innovation in both our economies. I look forward to welcoming PM Starmer to India soon," PM Modi posted on X.  The trade deal between India and the UK is seen as being strategically and economically critical for both nations. For Britain, a trade deal with India is crucial, with its attempt to recalibrate a post-Brexit trade relationship with the world. India is also the UK's second largest source of foreign direct investment (FDI). For India, this is a major FTA with its fourth largest export market, a key developed nation, and will help include modern trade issues.  The development comes against the backdrop of Commerce and Industry Minister Piyush Goyal’s visit to London last week to meet with his counterpart Jonathan Reynolds, and to give a final push to the trade pact and resolve pending issues.  Last month, Finance Minister Nirmala Sitharaman was also in London to push the bilateral investment treaty (BIT) talks. Both sides have struggled to iron out differences related to the investment pact, mainly over resolution of disputes. Apart from the BIT, which is still pending, there were only a few other pending issues related to the FTA, including New Delhi’s push for concluding a social security pact, and London's push for a greater market for financial services. India had also raised concerns over Britain’s plan to roll out a carbon border adjustment mechanism from 2027, and had been asking for relief measures. 

India-UK FTA journey

The India-UK FTA talks were launched 34 months ago, under the Conservative government headed by Britain' s former prime minister Boris Johnson, with an ambitious target to seal the deal in nine months. However, political instability in the UK, unresolved differences over various issues, and general elections in both nations during April-July further delayed the fruition of the deal. After almost a year-long hiatus, India and the UK formally launched a three-track negotiation for a free trade agreement (FTA), bilateral investment treaty (BIT), and double contribution convention or a social security agreement, in February this year. 

What products will become cheaper after FTA?

Under the FTA, India will slash duties on a number of British products. Whisky and gin tariffs will be halved to 75 per cent, before falling to 40 per cent by the 10th year of the deal, benefiting Britain's Scotch whisky industry and making the beverage cheaper in the world's largest whisky market, a Reuters report noted. 

 

  India will also cut automotive tariffs to 10 per cent under a quota from over 100 per cent currently. Other British goods which will face lower tariffs include cosmetics, aerospace, lamb, medical devices, salmon, electrical machinery, soft drinks, chocolate and biscuits. Based on 2022 data, India's tariff cuts will amount to over 400 million pounds, which is expected to more than double after 10 years, the Reuters report said. 

 

'Deserves huge applause': JK Paper MD

Harsh Pati Singhania, Chairman and Managing Director, JK Paper, praised the Indian government for for signing the FTA with the UK, calling it a 'historic moment'. He further said that it is a symbol of India’s growing influence on the global stage. 

 

"India’s first FTA with a major G7, reflects the world’s confidence in our economic potential, that will open new doors for trade, investment, innovation, and job creation. It’s a timely step for UK post-Brexit, and for India it will accelerate its journey to becoming the world’s third largest economy. I believe this will inspire more countries to partner with India and be a part of its growth journey," Singhania added.